{"id":13979,"date":"2019-12-09T12:58:45","date_gmt":"2019-12-09T16:58:45","guid":{"rendered":"http:\/\/www.wasobamaborninkenya.com\/blog\/?p=13979"},"modified":"2019-12-09T13:02:01","modified_gmt":"2019-12-09T17:02:01","slug":"the-fed-was-suddenly-facing-multiple-ltcms-bis-offers-a-stunning-explanation-of-what-really-happened-on-repocalypse-day","status":"publish","type":"post","link":"https:\/\/www.wasobamaborninkenya.com\/blog\/the-fed-was-suddenly-facing-multiple-ltcms-bis-offers-a-stunning-explanation-of-what-really-happened-on-repocalypse-day\/","title":{"rendered":"“The Fed Was Suddenly Facing Multiple LTCMs”: BIS Offers A Stunning Explanation Of What Really Happened On Repocalypse Day"},"content":{"rendered":"\n
\"\"<\/figure>\n\n\n\n

ZeroHedge<\/strong>, by Tyler Durden<\/a> — December 8, 2019<\/p>\n\n\n\n

Excerpt:<\/strong><\/p>\n\n\n\n

……………………………………<\/p>\n\n\n\n

The growing significance of these new cash sources “<\/em>can result in unfamiliar market dynamics<\/em><\/strong>“, said BIS’ Claudio Borio. Dynamics such as the one where impossible moves such as repo rates exploding from 2% to 10% in seconds become a daily occurence.<\/em><\/p>\n\n\n\n

So where does that leave us? Well, as the BIS concludes, since 17 September, “the Federal Reserve has taken various measures to supply more reserves and alleviate repo market pressures. These operations were expanded in scope to term repos (of two to six weeks) and increased in size and time horizon (at least through January 2020). The Federal Reserve further announced on 11 October the purchase of Treasury bills at an initial pace of $60 billion per month to offset the increase in non-reserve liabilities (eg the TGA). These ongoing operations have calmed markets.”<\/em><\/p>\n\n\n\n

We have covered all these “mitigating events”, and the problem is \nthat even though the Fed has now injected $208BN in liquidity via \novernight and term repos, and $114BN via permanent T-Bill purchases, or \nPOMO (i.e. “Not QE”), expanding the Fed’s balance sheet by $322 billion,\n the repo market still remains broken…<\/p>\n\n\n\n

... and the world may find just how broken it is as soon as December 31, when the next repocalypse event is tentatively scheduled to strike. The big question is whether the world’s mega hedge funds, the Millenniums, the Citadels, the Point72s afraid they will lose access to the precious repo funding that permits them to lever up as much as 10x, will sharply deleverage ahead of this event, in the process sending risk prices tumbling and precipitating the next market crash.<\/em><\/p>\n\n\n\n

But don’t take our word: here again is the top financial expert at the BIS, Claudio Borio, warning that that September\u2019s dislocation suggests that such repo “events” are only just starting and the repo markets “<\/em>may again find themselves in the eye of the storm should financial stress arise at some point”<\/em><\/strong>, a point which as the Fed recently revealed in its October FOMC Minutes <\/em>could take place as soon as year-end<\/em><\/a>.<\/em><\/p>\n\n\n\n

View the complete article including images and links at:<\/strong><\/p>\n\n\n\n

https:\/\/www.zerohedge.com\/markets\/fed-was-suddenly-facing-multiple-ltcms-bis-offers-stunning-explanation-what-really-happened<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

ZeroHedge, by Tyler Durden — December 8, 2019 Excerpt: …………………………………… The growing significance of these new cash sources “can result in unfamiliar market dynamics“, said BIS’ Claudio Borio. Dynamics such as the one where impossible moves such as repo rates … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_links_to":"","_links_to_target":""},"categories":[1],"tags":[],"class_list":["post-13979","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.wasobamaborninkenya.com\/blog\/wp-json\/wp\/v2\/posts\/13979","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.wasobamaborninkenya.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.wasobamaborninkenya.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.wasobamaborninkenya.com\/blog\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.wasobamaborninkenya.com\/blog\/wp-json\/wp\/v2\/comments?post=13979"}],"version-history":[{"count":2,"href":"https:\/\/www.wasobamaborninkenya.com\/blog\/wp-json\/wp\/v2\/posts\/13979\/revisions"}],"predecessor-version":[{"id":13982,"href":"https:\/\/www.wasobamaborninkenya.com\/blog\/wp-json\/wp\/v2\/posts\/13979\/revisions\/13982"}],"wp:attachment":[{"href":"https:\/\/www.wasobamaborninkenya.com\/blog\/wp-json\/wp\/v2\/media?parent=13979"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.wasobamaborninkenya.com\/blog\/wp-json\/wp\/v2\/categories?post=13979"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.wasobamaborninkenya.com\/blog\/wp-json\/wp\/v2\/tags?post=13979"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}